UK consumer confidence rebounded in February to its highest level in almost a year, in a sign of household resilience despite the cost of living crisis, according to data published on Friday.
Research group GfK said its consumer confidence index, a closely watched measure of how people view their personal finances and broader economic outlook, rose seven points to -38.
Beating consensus forecasts of -43, which is the highest reading since April 2022 for the index, which fell to a near-record low in January. The measure remained well below zero, however, indicating that most respondents reported a decline in confidence.
Joe Staton, director of customer strategy at GfK, said that while the February score was “still severely depressed”, consumers “suddenly showed more optimism about the state of their personal finances and the overall economic situation, especially for the next year”.
Survey respondents, based on interviews conducted between February 1 and February 13, were more optimistic about the year ahead, as the sub-index measuring their general outlook on the future economic situation jumped 11 points between January and February.
Consumers also reported regaining confidence in their personal finances, as well as an increased willingness to make expensive purchases.
The savings index, which measures how likely consumers are to save money but is not included in the overall score, rose from 14 to 19 – up five points from February last year.
Increases in all five measures included in the overall index suggest consumers may experience “a milder downturn than experts have predicted,” Staton said.
The survey follows a series of encouraging official data showing the UK avoided a contraction in the final quarter of 2022, while the labor market remained resilient despite economic headwinds.
Nominal inflation fell to 10.1% in January, down from a 41-year peak of 11.1% in October, the Office for National Statistics said last week.
Meanwhile, public finances have posted a surprise £30bn surprise in the fiscal year to January, the ONS said on Tuesday, giving Chancellor Jeremy Hunt scope to provide extra support to households in his spring budget on March 15.
Overall, February consumer confidence was 12 points lower than the same month in 2022, as rising energy bills and higher interest rates and food prices squeezed household budgets over the past 12 months. .
“(Consumer) moods, as well as the economy, remain a long way from pre-lockdown levels,” said Staton, “but a little consumer resilience may be what we need to smooth out any downturn in 2023.”